Catapulting New Zealand into the new generation of business
Business Edge asked Craig Hudson, Xero’s new Country Manager New Zealand, for his views on what’s ahead for business entering the ‘Augmented Age’
There’s much talk of disruption and accelerating change, but what does it really mean for New Zealand’s small and medium businesses, and how do they navigate into the short and long term?
We’ve seen several decades of transformative technological change, with the internet in the 1990s and noughties and the Cloud in the 2010s. Over those periods, the adoption curve has been relatively gentle.
Now, as we head towards the 2020s and the decade of an ‘augmented’ world, that curve will become steeper and getting to the front is becoming more important.
“It used to take decades to see any changes across an economy or business sector,” says Craig Hudson, Xero’s Country Manager New Zealand.
“Now it’s taking years, in some cases months or even weeks. We have been talking about things like driverless cars, wearables, and voice recognition for some time, and while there have been very early adopters, now they’ve hit the mainstream.”
“People are wearing smartwatches that provide them with real-time data of what’s going on with their bodies. We have Amazon Echo and Alexa, amazing software that sits on your table and talks to and obeys you. You can already manage your home from your phone.”
“In the United States, you can now walk into a supermarket, fill your trolley and walk out, and the transaction happens over your phone. The technology is there. Now it’s just about mass adoption.”
Craig is freshly relocated back in New Zealand with his wife and four children after two and a half years living in the United Kingdom leading Xero’s charge into developing markets in Europe, the Middle East, and countries like South Africa.
“The disruption happening in the UK, and across Europe in particular, is astounding. There is excitement globally around how much the accounting and bookkeeping industries are changing."
“It’s a race for technology, and Xero is wired in the game for that. We’ve released chatbot within Xero, and soon it will be voice recognition and onwards to keep at the top end of the adoption curve.”
One of the things that excites Craig most about being back in New Zealand, and taking the lead from predecessor Anna Curzon, is that New Zealand is one of the world’s most digitally connected countries.
“New Zealanders are much more advanced in adoption of new technology compared to other countries. It’s not just accountants and bookkeepers, but small businesses and big enterprises too. That’s great, as it allows Xero to advance relationships with enterprises like the bigger players and banks on behalf of the small businesses we’re trying to serve.”
“It’s very exciting to bring this mix of insight to New Zealand and look at how we can use our digital connectedness to catapult the country to becoming the frontrunner globally for the next generation of business."
“We need to look at what is on the horizon and ask ourselves how New Zealand can get there faster, make changes faster, than some of the larger countries that have ingrained institutional processes in place. We can prove the model here and export it to the world.’’
Craig brings impressive credentials to the role. A former pro-rugby player, he spent more than eight years playing professionally in New Zealand, France, England, and Wales before returning home to take a management role with fuel distribution company McFall Fuel in 2007 – which he helped lead through a period of successful growth.
“In my role with McFall, I found we were always held back by historical data,” says Craig. “We’d sit down with our accountant and review data from the past month, pat ourselves on the back, and move on to next month. It was always frustrating, while managing 50-odd staff and trying to champion decisions, that we could have done this or that had we had the right data.”
So, what will small businesses look like in five years’ time and how should they prepare?
“The battle between every startup and incumbent comes down to whether the startup gets disruption before the incumbent gets innovation.” Xero
Disruption is now the norm and no business is immune. Navigating this world means staying nimble, curious, and open to change.
“The traditional business that’s doing well but doesn’t continue to change, innovate and create a culture of challenge through leadership, will suffer,” says Craig.
“What are we doing for the future? That should be part of every business’ monthly management meeting. If things are going well, then that is more reason to look at change in order to stay at the forefront of the adoption curve.”
Critical to that is using tools that enable business owners to make key decisions at their fingertips, and not be reliant on others to present important information because their accountant, adviser and bank manager have already ticked the boxes.
“Everything should be up to date in your cloud system. If you’re not connected with all the systems you are using, you’re at risk. If you’re having to double handle things, whether that’s paper based or digital, you are wasting time.”
There is still a lot of that happening. “Excel remains one of the most popular accounting solutions in the world, and it is stifling innovation and killing small business,” says Craig. “Especially now that applications once only available to major enterprises can be readily used by small businesses.”
“It’s not just the big boys in town who have access to the beauty of these systems with their data-rich databases. Now, for a small monthly cost, regional business can get this. It’s changing the game.”
Live bank feeds are the next big thing changing the game, making the dream of real-time transactional data a reality. Xero has signed its first live bank feed in the United States feeding a customer’s card transaction straight through to their Xero account.
Craig cites another disruptor in this space, the UK startup ‘mobile-only bank’ Monzo, which does away with bricks and mortar branches and hinges 100% on the app. Effectively it is a mobile current account, instantly notifying users when they make a transaction and coding it as required, whilst providing a whole new level of spending analysis and management.
“This is where I would like to see New Zealand going,” says Craig. “It’s happening globally and we can enable that in New Zealand.’’
Xero’s migration to Amazon Web Services last year has accelerated that process. It was a massive undertaking but one that gives Xero “superpowers” to innovate and deliver to even the smallest one-man-band business at the kitchen table, the same access to the breadth of services and scale of infrastructure as the largest companies in the world.
Key skill sets for new generation business
In anticipation of the new generation of business, what are the qualities businesses should be looking for in new candidates and to foster in their workplace?
For Craig, culture-fit is the number one priority, along with hiring creative thinkers capable of learning fast and adapting quickly to change.
Even for the 33% of New Zealand SMEs that are not attracted to growth, having the right people on the team is a significant enabler in this rapidly emerging new world.
“If you are comfortable where you are, whether your desired outcome is about efficiencies or creating more time to spend with the kids, you also need team members that are adaptable, coachable, and willing to push the boundaries of decision-making.”
But there’s no point hiring right if the workplace culture doesn’t foster innovation and change and empower people to take the ride.
“In general, across the broad spectrum of personalities, human beings tend not to like change. So, we need to not only find the right people, but find a way to create a safe environment for change, so they trust that you have their best interests in mind.”
For Craig, it always comes down to people. “I fundamentally disagree with that adage that the customer is always right,” says Craig. “Sometimes the customer is wrong and you need to back your team as much as you possibly can. Your staff are for the long-term. If they’re happy in their jobs and they love their work, that will feed into attracting better staff and the right staff when you’re ready to hire or replace.”
“Being technology savvy is another fundamental quality that business owners should seek in their staff. Given the average Kiwi business owner is aged over 55, this savvy in employees helps owners to navigate the world of business solutions, which provide the gateway to being at the cutting edge of innovation.”
“Within accounting practices, we find a Xero champion we can invest in, and we train the trainer to train the rest of the team, by researching and keeping an eye on what’s in the market.”
“Ultimately, running a small business you get tied up in the day to day operations (to quote another adage – working in the business rather than on it).”
“Technology gives business owners and managers the ability to work on the business more; to be a helicopter and see what’s going on and make the strategic decisions, which is what your staff want you to do. They want to be directed but they also need to know the ‘why’, and to understand the vision and the dream.”
Preparing the next generation
Educating the next generation in the art of data aggregation is another part of the picture in catapulting New Zealand to the forefront of the digital age.
At a time when we are bombarded with information daily, the focus in schools needs to be on teaching children how to filter and interpret that information through a discerning lens.
“Dr Google isn’t always right. We need to be better at taking a huge amount of information and using our own critical thinking play to make educated decisions.”
What about Xero?
Xero is in hyper-growth in the United Kingdom, building important relationships to create connections between business from the sole-trader, the accounting partner, the bigger players and everything in between.
“We intend to be at the forefront of technology, to give us better insight, which in turn means we are able to pass more insight on to our clients – and to make it personal.”
“I believe that’s the bit people miss when talking disruption and technology. You still need to make it personalised. Businesses get data, but what are they doing with it?”
“The accounting firms that are doing well are those that are personalising and helping their clients make impactful decisions in a collaborative way.”
“Xero’s focus is on busting down the doors and walls of the traditional siloed model of accounting practices.”
He cites a recent experience at a Xero roadshow in South Africa, a country where accountants and bookkeepers face all the same issues and are asking all the same questions as their counterparts in other countries.
“How do we as accountants get better at business development? How can we prepare our staff to do more work in advisory services, and move away from just doing compliance work? How can we develop better relationships with our clients to help our business and theirs?”
“We are in a world of collaboration between business owners and accountants and the broader industry. We are rewiring the economy, and Xero is looking to be the hub that pulls in government, enterprise business, SME owners, and most importantly the accountant and their adviser.”
“It is a cool space where we can collaborate and come up with the solutions that SME owners want, to help them do amazing work.”